Can I deduct child support?

November, 18 2019 by Glynis Miller, CPA, MST

Simply stated, child support is not deductible. Any person making the child support payments cannot deduct them. Any person receiving child support payments is not required to report the payments as income. However, it is worth noting that identifying child support payments may not be so simple. It is because amounts paid may not be clearly classified as child support. The topic of alimony and separate maintenance payments must be included when discussing child support payments. Why? Well, alimony and separate maintenance payments may contain reductions that are dependent on an event relating to a child covered by the agreement. Additionally, changes were made to the tax treatment of alimony and separate maintenance payment with the passing of the Tax Cuts and Jobs Act in 2017 (TCJA).

The TCJA effectively made all alimony and separate maintenance payments nondeductible for any divorce or separation instruments that were executed or modified (with reference to TCJA provisions) after December 31, 2018. So, for these payments, it would still be just as simple to state that child support is not deductible. For alimony and separate maintenance payments stemming from divorce and separation agreements executed prior to December 31, 2018, there could be a problem identifying some of the child support payments in the agreement.

For those who made alimony or separate maintenance payments prior to 2018, the full amount of the payment may not be deductible. The person receiving that payment may not have to include the entire amount as taxable income. There are two situations where a portion of the alimony and separate maintenance payment will be applied to child support, as follows:

1. Within six months prior to, or six months after a child reaches the age of 18, 21 or age of majority in the local authority the alimony payments are reduced.
2. When payments are reduced two or more times in a period of not more than one year before or two or more years after a child reaches a specific age ranging between 18 and 24. If there is more than one child, a reduction must occur at the same age for each related child.

There is also another possible issue for those who have deductible alimony. A portion of the alimony will no longer be deductible alimony if a lump-sum payment is made to catch up with any child support payments that were unpaid. Payments will be applied first to the child support and then to the alimony. All payments are nondeductible regardless of how they are applied if the lump-sum payment is for alimony paid under the new rules of the TCJA.